The same is true for single family residential building permits. Single family permits issued in Q1 2014 totaled 125,580, which was just 16 dwelling units less than the tally in 2013.

Two to four family dwelling permits were similar, down from 5,457 to 5,241.

The same is not true, however, for multifamily, which went from making up one-in-three permits (33.6 percent) to almost four of every 10 dwelling units (38.1 percent). This trend will continue as lending regulations such QM result in greater percentage down payments and loan underwriting requirements exclude many with lower credit ratings.

The real question is whether the market is being under built, over built or is just right?

The latest 12-months of residential building permits are tallied below. In the 12-month interval ending March 2014, a total 933,578 residential permits were issued. In that same period, the U.S. created 2.282 million net new jobs. That makes 2.44 net new jobs per new dwelling. Real estate economists believe the sweet spot is 1.25 to 1.5 net new jobs per new dwelling – assuming there was not a serious supply hangover similar to that in 2009 after the burst of the housing bubble. A hangover, I believe, we have worked through.

Thus, under normal circumstances, the country would have added from 1.52 to 1.82 million net new dwellings based on the 2.282 million net new jobs – significantly greater than the 933,578 permits issued. Hence the U.S. is systematically under building by from 40 to 50 percent.

The ramifications are simple. In most markets, both home prices and rents will continue to escalate at a rate far in excess of inflation.

Good news for current owners.

Challenging statistics for those that currently rent and those that want to buy.